Business Succession Planning Attorneys
The most common reason a privately held business fails is the lack of a succession plan. Something unexpected happens – a partner’s sudden death or disability; an owner needs ‘out’; a divorce splits ownership – and without the instructions and guidance of a solid succession plan the strain on and cost to the business is too much for it to bear. It’s sold, broken up, maybe hangs in for a year or two before it ends up closing its doors.
Hopkins Centrich PLLC provides cutting edge, high quality, creative legal solutions – including succession planning - to businesses, individuals, and families in The Woodlands. Our sole focus is our client and their business.
What Makes a Great Succession Plan?
A succession plan is not just about who takes over a privately owned company and when – it’s about the company’s future as an operating, profitable, successful business. It’s about ensuring the company continues to benefit family members, shareholders, and employees long after the founders have moved on.
Two-thirds of privately held businesses in the U.S. do not have a succession plan. Many, perhaps most, of the remaining third have plans that identify a successor(s) but do little more – they are, in fact, not much more effective than not having a plan.
Not having a succession plan – one that’s well designed – results in drama, anger, hurt feelings, and Machiavellian actions. Think HBO’s Succession without the humor. No one, no business owner in the world, would want to live through anything like that.
There if no reason any business or family should.
All it takes to avoid the pain is a plan. One that allows the business to continue to operate successfully after an owner retires or dies. Or to facilitate an orderly sale of the business for its full worth.
The attorneys and staff of Hopkins Centrich have years of experience and success designing and implementing succession plans for closely held companies of every size.
Succession Planning Issues
There is a myriad of issues to consider when designing a succession plan for a closely held company. Questions to be answered. Conversations – with key employees and family members – that need to occur.
A few considerations:
How will the new ownership be structured? Who are the new owners? How is control of the company to be wielded? Who is responsible for day-to-day operations?
When will the transition begin? Will it be automatically triggered with an unexpected death or disability?
Identify key employees and insure they stay with the company during and after the change in ownership.
Minimize income, estate, and gift tax exposure.
Communicate and negotiate.
How best to preserve and protect business assets in changing circumstances.
Identify the family members who will remain in the business. Discuss how to – if at all – compensate those who do not.
Is there an advantage in changing the type of entity the company operates under?
Reduce the risk of business disputes.
These, and other issues, are addressed while, always, balancing the needs of the business, owners, and families.
No Succession Plan is Simple
Regardless of the size of the company, no succession plan is simple. There are questions to be asked and answered; conversations to be had with owners, key employees, and family members. There are emotions that must be acknowledged and addressed.
Those questions and conversations need to cover the following:
Who will be the new owners? How
will that ownership be structured?-
What ‘triggers’ the plan?
-
How to keep key employees
- Compensation
- Should the business entity be changed?
- Minimize taxes
- Anticipate and prevent disputes
There are, of course, many other issues, They all must be addressed while balancing the needs of the owners, business, and family. Always.
What Successful Succession Plans Do
A solid succession plan protects the company and the family against the unexpected – death, disability, and more - while also having provisions for contingencies. A successful plan addresses the company’s present and future needs, changing roles for management, and manages the expectations of family members and key employees. Succession plans are never created in a vacuum. They must be integrated into the estate plan, tax, and asset protection plans.
The process can be emotional – for the business owners, family, and key employees. Succession plans affect family members and key employees in number of ways - communication between all the parties is vital.
A solid succession plan may include:
-
Income, gift, and estate tax saving strategies
- Compensation packages for key employees
- Shareholder Agreements that
govern buy-outs due to death,
disability, or retirement
- An employee stock ownership
plan (ESOP) to give employees an
equity interest in the company while providing current shareholders with an
opportunity to diversify their holdings
-
A transition plan
-
Trusts to maintain control of the business
- Minimizing liability exposure
- Tax planning that may include
reforming as a different
corporate entity
The attorneys at Hopkins Centrich know the law, know business, and know exactly what is at stake. It may sound like an overwhelming – if not sobering - process, and it probably would be with attorneys who do not have years of experience designing and implementing succession plans. Not so, however, for a firm like Hopkins Centrich with deep knowledge of every aspect of business law and years of experience working with business owners to design succession plans.
How We Do It
We work as a team. We employ an interdisciplinary approach to issues whenever it is needed. Hopkins Centrich’s attorneys all have ‘big firm’ backgrounds. They formed our firm with the goal of keeping the best of those firms while designing a far more personal experience for our clients. We do this by using technology to its fullest.
We make use of every cutting-edge legal and business technology and methodology to assure that we deliver the highest quality legal services to our clients. It also allows us to respond promptly and efficiently to client needs, exceed project requirements, operate effortlessly with narrow timeframes, and develop innovative and flexible legal solutions at competitive fees.
We are creative. We are agile. We quickly adapt to rapidly changing circumstances, including changes in the law.
